Funds for the Long Haul
These managers have stood the test of time for their investors
For his part, Wanger is looking to a few good individual stocks--slot-machine maker International Game Technology, motorcycle maker Harley-Davidson, and financial firm SEI Investments are among his top holdings. A common element in his picks: market and brand dominance. He declares Harley-Davidson "the best brand in the business," noting that "people like Coca-Cola and McDonald's, but rarely do they tattoo their names to themselves." And he thinks the times are still ripe for bonds. "In this environment, they'll be about as good as stocks," he says, with less risk. -James M. Pethokoukis
FIRST EAGLE GLOBAL
MANAGER'S BEST YEAR: 1980; up 33.2%
MANAGER'S WORST YEAR: 1990; down 1.3%
The French are known for their, shall we say, quirky tastes (Jerry Lewis, the Three Stooges, those annoying mimes). Jean-Marie Eveillard certainly lives up to his heritage. When other money managers were loading up on technology stocks during the Internet craze of 1999, this 62-year-old Frenchman instead bet big on companies such as Rayonier, a small Florida firm that supplies lumber to the construction industry, and Buderus, a German manufacturer of boilers. "Boilers and timber, you could hardly be more `old economy' than that," says the manager of the First Eagle Global fund. Call them whatever you want, they proved to be smart plays. Buderus stock rose 50 percent, and Rayonier shares stayed even over the past three years while the S&P 500 fell nearly 38 percent.
Eveillard's eclectic sensibilities didn't win him many friends during the bull market. More than half of the shareholders in First Eagle Global pulled out of the fund by the end of the 1990s, slashing its assets from nearly $4 billion in 1997 to $1.6 billion in 2000. That's despite the fact that the fund, which trailed its peers badly in the late '90s, still generated a total return of 19 percent in 1999. For those departing, it was their loss. Over the past three years, First Eagle Global has generated average annual returns of more than 10 percent, as so-called value investing has come back into vogue. In that period, the average stock fund lost about 12 percent a year. Over the past 30 years, the fund has been a top performer, generating average total returns of nearly 12 percent a year.
Eveillard, who started with the fund as an analyst in 1970 and has been leading it since the Carter administration, has a simple philosophy when it comes to managing other people's money: "We would rather lose half of our shareholders than lose half of our shareholders' money." He and Charles de Vaulx, his comanager since 1999, act like private investors, trying to judge whether a stock is over- or undervalued based on what they think a buyer would be willing to pay for the company. When they can't find solid, undervalued U.S. companies, they look overseas or go fishing for other types of assets. About a third of the fund's assets are currently invested in Western European stocks, like Buderus, and an additional 15 percent is in bonds. And well before the recent gold rally, Eveillard and de Vaulx started investing a small percentage of their assets in gold and gold-related companies. Their bond and gold investments helped the fund post returns of more than 10 percent in 2002, when the average fund lost more than 22 percent of its value.
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